Crude Palm Oil Weekly Report – August 25th, 2018

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Borneo Post FCPO Chart 25th August

The Malaysian palm oil futures recovered from two sessions of declines due to weaker ringgit and tracking strength in stronger related oils despite weighed down in earlier session due to concern over rising output.

The benchmark crude palm oil futures (FCPO) contract fell 0.89 per cent to RM2,218 on Thursday, which was RM20 lower than RM2,238 during the previous week, on Friday.

The average daily trading volume during Monday, Tuesday & Thursday decreased 7.35 per cent with a total average of 39,716 contracts traded, as compared with total average of 42,867 contracts traded during last Monday to Thursday.

Daily average open interest during Monday, Tuesday and Thursday increased 1.31 per cent to 250,727 contracts from 247,451 contracts during last Monday to Thursday.

AmSpec reported that exports of Malaysian palm oil products for August 1 to 20 fell 10.58 per cent to 609,098 MT, from 681,178 MT shipped during July 1 to 20.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during August 1 to 20 fell 9.61 per cent to 625,819 tonnes from 692,334 tonnes shipped during July 1 to 20.

Palm oil output in Malaysia, the world’s second largest producer, typically rises in the third and fourth quarter of the year in line with the seasonal trend.

Uncertainties surrounding trade talks between China and the US have contributed to the bearish trading sentiment in the palm market, said another trader. US soybean and soyoil prices were down earlier after US President Donald Trump told Reuters on Monday he did not expect much progress from trade talks with China in Washington.

Spot ringgit depreciated 0.13 per cent to 4.1095 against the US dollar, compared to 4.1040 on last Friday.

The dollar fell on Friday ahead of a speech by the Federal Reserve’s chairman which investors hope will provide an indication of the central bank’s plans for monetary tightening and reaction to recent criticism by US President Donald Trump.

Technical analysis

According to the FCPO daily chart, FCPO erased three sessions of losses and may retest first support level at 2,213.

On Monday, FCPO ended at 2,254, 16 points higher than the previous close of 2,238, with a traded volume of 13,836.

On Tuesday, FCPO ended at 2,240, 14 points higher than the previous close of 2,254, with a traded volume of 19,304.

On Thursday, FCPO ended at 2,217, 23 points lower than the previous close of 2,240, with a traded volume of 15,004.

On Friday, FCPO ended at 2,218, one point higher than the previous close of 2,217, with a traded volume of 11,775.

Based on the daily candlesticks chart, FCPO traded sideways between 2,260 and 2,180 and still remain in bearish zone.

FCPO might retest the first support level at 2,213 and if it failed to break below the first support level, it may continue trade lower until the second support level at 2,201. Hence, aggressive traders may initiate short positions while conservative traders may wait for better market entry.

Resistance lines will be positioned at 2,260 and 2,275, whereas support lines will be at 2,213, and 2,201. These levels will be observed in the coming week.

Major fundamental news this coming week

AmSpec and SGS reports will be released on August 25.

Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us at www.opf.com.my. Disclaimer: This article is written for general information only. The writers, publishers and OPF will not be held liable for any damage or trading losses that result from the use of this article.